First-half performance at Personal Group (PGH) - which underwrites hospital and convalescence plans for predominantly blue collar workers - wasn't as bad as these headline figures suggest. In fact, annualised new business premiums rose 21 per cent to a record £4.9m - and this is before the benefits of a big contract, secured in May, for Network Rail's 35,000 strong workforce.
Chief executive Mark Scanlon reckons that Network Rail contract - one of the biggest the company has ever won - will take around six months to roll out, with revenue reaching the bottom line in the second quarter of 2014. First half revenue only fell because the company has been investing heavily to meet an increased work load - the sales team, for instance, has grown 20 per cent. Although profits were also dented by a higher claims ratio - these two factors will have an impact on full-year results. But further big recruitment costs are now unlikely and management hopes to generate significant operational efficiencies, and more business, through greater use of iPads at the first point of contact with customers.
In the light of higher claims and costs, broker Cenkos Securities has reduced its full-year earnings forecast to 21p, with per-tax profit of £8.3m anticipated (from 22.8p/£9.4m in 2012).
| PERSONAL GROUP (PGH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 440p | MARKET VALUE: | £132m | |
| TOUCH: | 435-445p | 12-MONTH HIGH: | 445p | LOW: 320p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 89p | NET CASH: | £3.45m | |
| Half-year to 30 Jun | Gross premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 10.7 | 4.09 | 9.50 | 8.90 |
| 2013 | 11.2 | 3.31 | 8.32 | 9.30* |
| % change | +5 | -19 | -12 | +4 |
*Dividends paid quarterly - second quarter dividend paid on 25 September | ||||
